Brexit bubble may lure rich Indians to London realty

India's rich and famous consider London their second home and a safe haven for real estate investments besides, of course, an option to beat the summer heat. Wealthy Indians emerged the second biggest buyers of central London residences three years ago, only behind the British.

Brexit, in the short term, may accelerate this process. Brokers predict a short run 'Brexit bubble' in the property market. A Mayfair estate agent, Peter Wetherell, who put forth the bubble theory, said the exit offered a lucrative bet for dollar-based Asian investors despite the market uncertainty. He argued that the plummeting pound provided short-term buying opportunities of pricey central London assets.

"The combination of lower prices and devaluation of the pound should draw in Indian investors looking to acquire assets in the UK," said Shishir Baijal, chairman and MD of Knight Frank (India). "London has always been a favourite destination for Indian property buyers and it augurs well for Indian investors to make their move now. For both residential and commercial property, there will be short-term volatility. Potentially, and selectively, pricing could come under pressure," he added.

Beginning 2013, Indian developers like Lodha Group and Indiabulls Real Estate effected large property acquisitions to redevelop luxury residences and hotels. At the peak, Indians were spending one billion pounds on London property deals, annually. And property markets in locations such as Mayfair became reliant on Indian buyers to an extent.

After Brexit, Cushman & Wakefield India MD Anshul Jain believes individual purchasers of properties in the UK may not see any major impact in terms of properties already bought, especially in economic centres of London, Glasgow and Edinburgh. But there are broader worries that Brexit is likely to impact London's economy, leading to corporate dislocations and rise in unemployment. How these macro factors would play out on London's real estate is unpredictable, with many local agents screaming about a 20% fall in real estate prices across the UK.